SETS
SETS is the London Stock Exchange’s flagship electronic order book, trading FTSE100, FTSE250 and the FTSE Small Cap Index constituents as well as other liquid securities. The Exchange also operates a modified version of SETS for the trading of covered warrants and other structured products.
Powered by our world-leading trading system, TradElect, SETS has experienced exponential growth since its launch in 1997 executing millions of trades a day at millisecond latencies.
Functionally rich with multiple order types, market maker support all the way up the book and competitively cleared, SETS is one of the most liquid electronic order books in Europe. It is this liquidity, underpinned by a rigorous rulebook and market supervision, coupled with the widest stock coverage, that attracts so many participants creating unrivalled opportunity to do business.
SETS developments
Hidden order functionality and Minimum Execution Size
As part of the Exchange’s continual enhancements to the SETS, as well as the IOB and ITBB order books non-displayed “hidden” order functionality and Minimum Execution Size functionality will be introduced in 2009. This richer trading functionality enables customer’s orders to interact with a deep, liquid order book, providing a high probability of execution, whilst minimising information leakage and helping to reduce the total cost of trading.
Hidden limit orders. Allow participants to enter a limit order where both the price and volume are hidden. This means that participants do not know how big the order is, and unlike an iceberg where there is a continual refresh in the peak size, participants have no idea if it is there or not. These orders can only be entered where it meets the Large-In-Scale or Large Order Threshold considerations.
Hidden pegged orders. Allow participants to peg their order to, or at a differential or offset to, the Exchange’s Best Bid, Best Offer or Mid Price. Hidden pegged orders provide greater flexibility and increase the likelihood and immediacy of execution.
Mid price orders enable execution at the true mid price, ie within the tick size, so if the security is at a one tick spread, execution will occur at half a tick, delivering half a tick price improvement.
Minimum Execution Size. Available for non-displayed order types, Minimum Execution Size (MES) enables customers to stipulate the minimum aggregate volume against which the order can be executed in continuous trading. MES protects participants from small volume orders thereby limiting information leakage.
MiFID related developments
SETS now offers market making in all stocks including those deemed to be “liquid” under the new Markets in Financial Instruments Directive (MiFID). This provides customers with an on-Exchange alternative to being a Systematic Internaliser (SI).
This enhancement provides users with:
- an intuitive, two-tier market structure for the trading of all UKLA listed securities - SETS for “liquid” stocks and SETSqx for “non-liquid” stocks as defined under MiFID.
- An automatic order-driven trading service which is flexible and transparent, ensuring that every buy or sell order receives maximum exposure, resulting in a seamless and cost-effective execution.
- Order book trades in UK and Irish securities that are covered by a central counterparty operated by the London Clearing House.
SETS securities
If you want to find out more, please contact pams@londonstockexchange.com.
